UK top for foreign investment in Europe, but sentiment falling

Big_BenThe UK has held onto its position as Europe’s most attractive place for foreign direct investment projects into financial services, yet longer-term investor sentiment is at an all-time low as Brexit uncertainty continues.

Nearly half of investors believe that the UK’s attractiveness will decrease over the next three years, according to EY’s 2019 UK Attractiveness Survey for Financial Services.

Despite this, 2018 saw 112 foreign direct investment projects into UK financial services, making it the highest in Europe – ahead of Germany in second place with 81 projects.

The US accounted for nearly 30% of all projects, making it the main source of foreign investment in the UK, the survey found.

EY’s financial services leader Omar Ali said that firms continued to invest in the UK for the same reasons as always – “drawn to its talent, tech infrastructure, thriving fintech hubs, quality of life, time zone, regulatory and legal systems and its reputation”.

“But with sentiment falling, the policy decisions made in the next few years, in particular those that help us attract and develop the right skills, will be a major determining factor in whether this is a temporary blip in sentiment or whether investment will trickle away,” he said.

“This could harm UK financial services and the economy as a whole. It is critical to the UK’s future economic prosperity that politicians prioritise re-skilling, education and the future immigration system.”

In terms of cities, London remained a dominant force, attracting the highest level of foreign direct investment compared to other European cities in 2018 with 86 projects – up from 47 in 2017.

Frankfurt came second with 39 projects, followed by Paris with 33 projects. Madrid recorded a significant increase with 15 projects, up from three in 2017.

©2019 funds europe